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Petitioner: PATANWALA AND SONS, KARACHI VS Respondent: COLLECTOR MCC OF APPRAISEMENT-WEST CUSTOMS HOUSE KARACHIHonorable Justice Muhammad Nadeem Qureshi (Member Judicial-I) and Muhammad YahyaNadeem Ahmed Mirza,Ammar Aamir Mir
2016 P T D (Trib.) 1266
[Customs Appellate Tribunal]
Before Muhammad Nadeem Qureshi (Member Judicial-I) and Muhammad Yahya (Member Technical-I)
Messrs PATANWALA AND SONS, KARACHI and 3 others
Versus
COLLECTOR MCC OF APPRAISEMENT-WEST CUSTOMS HOUSE KARACHI
Customs Appeals Nos.K-599, K-600, K-606 and K-601 to K-606 of 2015, decided on 15th December, 2015.
(a) Customs Act (IV of 1969)---
----Ss. 32 & 80---Import of goods---S.R.O. No.371(I)/2002 dated 15-6-2002---Checking of goods declaration---False statement and mis-declaration---Scope---Charge of mis-declaration had been levelled on the importer on basis of specifications given in MTC, which according to department were not as shown therein instead and they could not determine the same through naked eye and a test was desired---Under regime of "One Customs", no duty and taxes were paid in advance, in fact under S.R.O. No. 371(I)/2002 dated 15-06-2002---Under S. 80 of Customs Act, 1969, it was duty of customs officers to determine the exact description, specification, quantity, weight and PCT Heading as the same fell within the ambit of "assessment"---Department was also empowered under S. 80 of Customs Act, 1969 to either accept or reject the claim of exemption and complete the assessment as ascertained by it under respective PCT heading, mentioning or claiming ascertained PCT, under which importer's goods did not fall or could not be construed an act of mis-declaration on the part of importer---During the process of assessment, it was the duty of Assessing Officer not only to examine the goods but also to tally the description, its weight and value of goods thereof and to consider any extra information available on the Bill of Entry in order to arrive at a correct assessment of duty and taxes---To constitute a criminal act an element of mens rea and intentional knowledge was necessary and the offending act must be one in which material particulars had been wrongly given or provided to Customs Authorities---In the present case, in goods declaration all the entries relating to description, quantity and nature of goods were found true and no charge had been framed against importer on such count---Alleging a charge of mis-declaration in such circumstances, particularly on the basis of wrong classification heading did not constitute an offence within the framework of S. 32 of Customs Act, 1969 as there was no material falsity in the statement made by importer---Appeals were allowed, accordingly.
2003 PTD (Trib.) 293; Umme Kulsoom Trading Co. v. Collector of Custms Appeals and others Customs Appeal No.K-333 of 2006; State Cement Corporation v. GOP 2002 MLD 1980 and Messrs Sadaat Khan FOP and others 2014 PTD 1615 rel.
(b) Customs Act (IV of 1969)---
----Ss. 80, 81(2), 81(4) & 81(5)---Checking of goods declaration---Provisional assessment of liability---Goods declaration attaining finality---Scope---Final assessment order under Ss. 80 & 81(5) of Customs Act, 1969 should have been passed by officer expressed therein within six months or further extended period of 90 days by Collector of Customs after serving a notice to importer---In the present case, no extension was given under S. 81(2) of Customs Act, 1969 and no such order had been passed, consequent to which declaration of importer stood final in terms of S. 81(4) of Customs Act, 1969.
Messrs Abdul Aziz Ayoob v. Assistant Collector of Customs and 3 others PLD 1990 Kar. 378; Messrs Golden Plastic (Pvt.) Ltd. Collector of Customs and others PLD 2002 Kar. 54; Khalid Mahmood v. Collector of Customs 1993 SCMR 1881; Hassan Trading Company v. CBR 2004 PTD 1979 and Collector of Customs Appraisement v. Automobile Corporation of Pakistan 2005 PTD 2116 rel.
(c) Customs Act (IV of 1969)---
----S. 179(3)---Adjudication, power of---Show-cause notice, issuance of---Delay of 311 days---Scope---Show-cause notice was issued on 11-08-2013 by Department and an order under S. 179(3) of Customs Act, 1969 should had been passed within 120 days i.e. on or before 21-02-2014, from the date of show-cause notice or within a further extended period of 60 days prior to lapse of initial period of 120 days after serving a notice to person concerned---Department's plea was that Federal Board of Revenue had extended the period after expiry of 311 days of initial period of 120 days and 251 days from expiry of entire period of 180 days---Held, that Board was not competent to extend the time period after expiry of period given under S. 179(3) of Customs Act, 1969, rendering the extension without any lawful authority, hence, the same was void and ab initio.
Khalid Mahmood v. Collector of Customs 1993 SCMR 1881; Vithoba Syamna v. Union of India AIR 1957 Bom. 321 and Eastern Rice Syndicate v. Collector of Customs PLD 1959 SC 364 rel.
(d) Customs Act (IV of 1969)---
----Ss. 79, 80, 32, 207, 208 & 209---Import of goods---Goods declaration---Liability of principal and agent---Declaration and assessment---Scope---Provisions of Ss. 79 and 80 of Customs Act, 1969 revealed that importer or his agent had to file goods declaration for release of goods on which Assessing Officer had to make an assessment and any claim made by an importer was subject to scrutiny by assessing officer who had been vested with unfettered powers to complete an assessment---Claim was subject to approval by a competent officer and where a competent authority granted or rejected the claim, no charge of fraud or otherwise could be linked to the Agent or to the principal, whose duty was to submit relevant documents for processing for release of consignment or application---Held, that Department which issued show-cause notice grossly misunderstood the scheme of operative mechanism of Ss. 32 & 80 of Customs Act, 1969---Liability of Clearing Agent during the course of clearance of consignment had to be evaluated under Ss.207, 208 and 209 of Customs Act, 1969 which indicated that an Agent represented his principal until and unless any direct evidence was attributed against him or when department was not able to prove any criminal intent on his part, he could not be penalized under general provisions of Customs Act, 1969 unless he violated the governing condition of his licence---Clearing Agent, in normal course of business, filed a bill based upon the documents and information provided by importer and he could not be presumed to be privy to any illegal arrangement, which importer might have intended in his mind---For such purpose some evidence of his direct involvement will have to be brought on record.
2002 YLR 2651 rel.
Nadeem Ahmed Mirza, Consultant, Mirza Muhammad Abeeullah Nadeem, Consultant and Mr. Obayd Mirza, for Appellants.
Ammar Aamir Mir, Assistant Collector for Respondents.
Date of hearing: 5th December, 2015.
JUDGMENT
MUHAMMAD NADEEM QURESHI, MEMBER JUDICIAL-I.---Through this common order, we intend to dispose off above 08 Appeals bearing Nos.599 to 606/2015, filed under Section 194A(1) of the Customs Act, 1969 against the Orders-in-Original No.415/2014-15 dated 26.02.2015, 410/2014-215 dated 26.02.2015, 413/2014-15 dated 26.02.2015 & 409/2014-15 dated 26.02.2015 passed by Collector of Customs (Adjudication-I) (here-in-after to be referred as respondent No.2). These appeals have identical issue of law and facts therefore, being heard dealt with and dispose of simultaneously though this common order in the light of the judgment of the Honorable High Court of Sindh in Customs Reference No.157 of 2008, S.M. Naqi son of Syed Muhammad Hussain, Karachi v. Collector of Customs (Adj-I) and Others.
2. Since, these 08 appeals are based on similar facts and questions of law, therefore, it is needless to reproduce facts of each case separately. Hence, for reference the facts of Appeal No. K-599/2015 are taken into consideration for decisions and which are, the appellant imported a consignment of 434711 kgs of prime quality Hot Rolled Alloy Steel Sheet in coils @ US$. 0.5650/kg from China. Upon receipt of import documents from shipper, the appellant delivered those to his clearing agent Messrs Qureshi Agencies, Karachi CHAL No. 1347 for transmitting online Goods Declaration (here-in-after to be referred as GD) through "One Custom" regime under the provision of Section 79(1) of the Customs Act, 1969. The declaration made in the transmitted GD was found correct and it was numbered as KAPR-HC-121011-16062013. The clearing agent of the appellant obtained print out of the said GD and approached the nominated Appraiser namely Muhammad Naeem, who instead of completing the assessment on the basis of annexed letter of credit, invoice, packing list, B/L, FTA and Mill Test Certificates (here-in-after to be referred as MTC), opted to get the goods examined first and for that he endorsed examination order on the reverse of GD and referred the same to Principal Appraiser, who endorsed the same. Consequent to which the official of clearing agent approached the nominated examining official namely Nafees Ahmed posted at Shed of West Wharf, who ordered to get the GD registered, after that he conducted the examination in terms of Section 198 of the Customs Act, 1969, wherein the goods were found as per declaration and the said fact was adduced by him on the reverse of GD and referred the same along with drawn sample to the Principal Appraiser of the Group, who after initialing the report marked it to the nominated Appraiser, who instead of passing the assessment order under the provision of Section 80 of the Customs Act, 1969, disputed the veracity of MTC and opined that the goods in question are not alloy instead non alloy and the quantity of "Boron" is infact not available in the goods, instead spray of Boron has been made on the surface of the sheets. Mere spraying of boron least qualify the goods as alloy for levy of duty and taxes on the declared PCT. The said opinion was disputed by the appellant, and his clearing agent, resultant, the respondent No. 1 directed the Deputy Collector of the Group to allow release of the goods under the provision of Section 81 of Customs Act, 1969 after securing differential amount between the duty and taxes of non alloy and alloy steel sheet in the shape of Bank Guarantee or Pay Order and thereafter forward the samples to A.Q. Khan Research Laboratory (here-in-after to be referred as KRL) for determination of the actual description of the goods. In accordance with the orders, the appellant submitted Pay Order bearing No. HMBL /PO/06617665 dated 18.01.2013 for Rs. 2,829,804.00 and the Deputy Collector of the Group accordingly passed provisional assessment order under Section 81 ibid and the security was ordered to be detached. After detachment of the security, the Principal Appraiser, passed clearance order under section 83 ibid on 24.06.2013 in exercise of power vested upon him under SRO 371(I)/2002 dated 15.06.2002. Consequent to which the appellant clearing agent obtained delivery of the goods from the port.
3. The Deputy Collector of the Group subsequently dispatched the drawn sample to KRL for test through letter dated 21.06.2013, Metallurgy Division of KRL reported the test through analysis/characterization of the Steel Sheet vide dated 22.07.2013 through which reported that "Fe, base, Mn 0.44 C 0.154 and S 0.0048 are found whereas element of AI, B, Co, Cr, Cu, Pb, Mo, Ni, Nb, Si, Ti, W,V & Zr were not detected. Since, the report was not in conformity with the MTC forwarded by the shipper the appellant forwarded letter dated 24.08.2013 to the respondent No. 1 through which he disputed the result of test report of KRL and requested for retesting of the sample by the Peoples Steel Mills Ltd., (here-in-after to be referred as PSML) which was allowed and the Deputy Collector of the Group dispatched sample to the PSML which through its report dated 27.08.2013 confirmed that the goods of the appellant is composed of following elements:--
Chemical Composition (Wt.%)
S. No.
Sample ID
Element
C
Si
Mn
P
S
B
Test Method
1
Standard Actual
0.18
0.03
0.47
0.019
0.010
8
ASTM E-1009 & E- 1019
4. That inspite of the fact that the retest of PSML confirmed the veracity of MTC and FTA, the respondent No. 1 directed the Deputy Collector of Group to ignore it and frame contravention report on the basis of report of KRL and forward it to respondent No. 2. As directed the contravention report was framed and forwarded to respondent No. 2, who issued show cause notice dated 24.10.2013 with the allegation that inspite of confirmation of the quality of the goods as prime, the composition for the determination of actual description cannot be made through naked eye that as to whether the goods are alloy or non alloy and are classifiable either under the declared PCT 7225.3000 attracting 5% duty or non alloy falling under PCT 7208.9090 attracting 10% duty, drawn sample was forwarded to KRL, which vide Report No. MIC13-CUS-1028 dated 22.07.2013 confirmed that the quantity of Boron is not found in the imported goods, consequent result of which is that the goods are deems to be non alloy steel sheets as per definition available in Chapter Note (f) of Chapter 72 of the Pakistan Customs Tariff and these falls under PCT 7208.9090 attracting 10% customs duty instead of declared PCT 7225.3000 attracting 5% duty. The result of the test confirmed that the appellant deliberately and willfully attempted to clear the goods through their clearing agent as alloy steel with an intend to hoodwink the Government's legitimate revenue to the tune of Rs.2,829,804.00 and this act of the appellant's attract the mischief of Section 32(1) and (2) of the Customs Act, 1969, punishable under clause (14) of Section 156(1) of the Customs Act, 1969 read with SRO. 499(I)/2009 dated 13.06.2009. The advocate of the appellant submitted letter dated 18.11.2013 with the respondent No. 2, through which intimation was given that since the issue in question is under adjudication with the High Court of Sindh through C.P. No. 4295/2013, the matter should be kept in dormant till the decision of the High Court in the referred Petition and several others. The respondent No. 2 instead of keeping the matter in abeyance, passed order dated 26.02.2015, Paras 5 & 6 are relevant, which are reproduced here-in-below:--
5. I have gone through the case record and considered written/verbal arguments of both the sides. As per Messrs A.Q. Khan Laboratory, Test Report MIC/13-CUS-1028 dated 22.07.2013, the chemical composition of the impugned goods has been found as "Non-Alloy Steel". The respondents declared the imported goods 'Hot Rolled Steel Coils' under PCT heading 7225.3000 CD@ 5%, whereas upon test the goods have been found to be 'Hot Rolled Steel Plates' of 'Non Alloy Steel' attracting classification under PCT heading 7208.9090 chargeable to CD @ 10% which substantiate that the respondents deliberately and willfully attempted to placed the goods 'alloy Steel'. Section 79 of the Customs Act, 1969 clearly states that the importer is responsible to give correct declaration of the goods mentioning their complete and correct particular of the consignment and to pay duty and taxes as per declaration it is evident that the respondent have mis-declared the description and classification to evade payment of legitimate amount of duty and taxes applicable on the subject goods. In view of the above charges leveled in the show cause notice stand established. I, therefore, order for confiscation of the offending goods under Section 156(1) of Clause (14) read with Sections 32(1) and 32(2) of the Customs Act, 1969, however an option under Section 181 of the Customs Act, 1969 is given to the importer to redeem the confiscated goods on payment of 35% Redemption fine in terms of SRO. 499(I)/2009 dated 13.06.2009 of the value of offending goods as determined by the department in addition to the payment of duty and taxes chargeable thereon. I also impose a penalty of Rs. 200,000.00 (Rs. Two hundred thousand) on the importer and Rs.100,000.00 (one hundred thousand) on the clearing agent.
6. In order to made statutory limitation of the import of the adjudicating authority in terms of section 179 of the Customs Act, 1969, this order is being made; however the implementation of this order shall be held in abeyance till decision of the Hon'ble Court in Constitution petition No. D-4295/2013 dated 13.08.2013.
5. Being aggrieved and dis-satisfied with the impugned orders-in-original the Appellant's filed the these appeals before this Tribunal on the ground incorporated in the Memo. of Appeal on the date of hearing Consultants/Advocates appeared on behalf of the Appellant's and reiterated the fact and contents of the case and argued strictly in accordance with the grounds mentioned in the Memo of Appeal which are:--
(i) The provisional assessment under the provision of Section 81 of the Customs Act, 1969 had been passed on 21.06.2013 and the test report of the A.Q. Laboratory was received on or after 22.07.2013 and of People Steel Mills Ltd on or after 27.08.2013. Hence, it was mandated on the subordinate of respondent No. 1 namely Deputy Collector of Customs, Group to pass an assessment order under the provision of Sections 80 and 81(5) of the Customs Act, 1969 within six months from the date of provisional assessment i.e. by 18.12.2013. The subordinate of respondent No. 1 was available with no cause or reason for not passing an order within the stipulated period. To the contrary, he has not passed the order to this date.
(ii) That since no final assessment order has been passed by the respondent No. 1 subordinate till to date, hence the declaration of the appellant goods stood final, under subsection (4) of Section 81 of the Customs Act, 1969. Rendering the order dated 26.02.2015 void and ab-initio and of no legal effect and stood validated from the judgments of the Hon'ble High Court of Pakistan reported as 2005 PTD 1968 Trade International v. Deputy Collector of Customs, 2007 PTD 2119 S. Fazal Ellahi and Sons v. Deputy Collector of Customs and others, 2008 PTD 1587 Clover Pakistan Ltd. v. FOP and others, 2010 PTD 900 Collector of Customs, MCC of Appraisement v. Pak Arab Refinery, PTCL 2011 CL 575 Sus Motors (Pvt.) Ltd., v. FOP, 2011 PTD 2851 Messrs Crescent Art Fabric v. Assistant Collector and Customs and 4 others and 2856 Trend International v. Deputy Collector, Dry Port, Multan and 4 others, 2006 PTD 1276 Dewaan Farooq Motors Ltd , Karachi v. Customs Excise and Sales Tax Appellate Tribunal, 2005 PTD 2116 Collector of Customs (Appraisement) v. Auto Mobile Corporation of Pakistan and 2004 PTD 795 Messrs Farooq Woolen Mills, Gujranwala v. Collector of Customs, Dry Port, Sambrial and others, 2012 PTD 980 Dawlance Electronic (Pvt.) Ltd. v. Collector of Customs, Karachi.
(iii) Notwithstanding to the above illegality, it is of paramount importance to state that the show cause notice by the respondent No. 2 was issued on 24.10.2013 and an order under the proviso of subsection (3) of Section 179 of the Customs Act, 1969 should had to be passed within 120 days from the date of issuance of show cause notice i.e. by 21.02.2014 or within a further extended period of 60 days during the initial period of 120 days with reason to be recorded for extension in writing by the FBR. No extension was obtained/granted by respondent No.2/FBR prior to expiry of initial period of 120 days i.e. before 21.02.2014. Instead as evident from para 4 of the order the extension was granted by FBR vide letter dated 30.12.2014 i.e. after expiry of 311 days of the initial period and 251 days after the expiry of entire allotted period of 180 days. Rendering the order-in-original barred by time by 311 days. Hence, without power/jurisdiction, as such ab-initio void as held in reported judgments 2008 PTD 60 Messrs Super Asia Muhammad Din Sons (Pvt.) Ltd., v. Collector of Sales Tax Gujranwala and 2008 PTD 578 Messrs Hanif Strawboard Factory v. Additional Collector (Adjudication) Customs, Sales Tax and Central Excise Gujranwala, 2009 PTD 762 Messrs Tanveer Weaving Mills v. Deputy Collector Sales Tax and 4 others and 2009 PTD (Trib.) 1863 Messrs Syed Bhai Lighting Limited, Lahore v. Collector of Sales Tax and Federal Excise, Lahore and 2 others and 2009 PTD 1978 Leo Enterprises v. President of Pakistan and others, 2010 PTD (Trib.) 1010 Innovative Impex, v. Collector of Customs, Sales Tax and Federal Excise (Appeal), 2011 PTD (Trib.) 79 Fazal Ellahi v. Additional Collector of Customs, MCC of PaCCS, 2011 PTD (Trib.) 987 Unique Wire Industries v. Additional Collector of Customs, MCC of PaCCS , 2011 PTD (Trib.)1146 Kaka Traders v. Additional Collector of Post Clearance Audit and 2012 PTD (Trib.) 1650 Pak Electron Ltd. v. Collector of Customs, Lahore and others.
(iv) That for determination of alloy or non alloy product clause (f) of Chapter Note 72 reading as iron and steel of the Pakistan Customs Tariff is relevant and which read as:
(f) Other alloy Steel
Steel not complying with the definition of stainless steel and containing by weight once or more of the following elements in the proportion shown:
- 0.3 % or more of aluminum.
- 0.0008 % or more of boron.
- 0.3 % or more of chromium.
- 0.3 % or more of cobalt.
- 0.4 % or more of copper.
- 0.4 % or more of lead.
- 1.65 % or more of manganese.
- 0.3 % or more of aluminum.
- 0.08% or more of molybdenum.
- 0.3 % or more of nickel.
- 0.06 % or more of niobium.
- 0.6 % or more of silicon.
- 0.6 % or more of titanium
- 0.3 % or more of tungsten (wolfram)
- 0.1 % or more of vanadium
- 0.05 % or more of zirconium
- 0.1 % or more of other element (except sulphur, phosphorus, carbon and nitrogen) taken separately.
(v) That for determination of the steel that as to whether it is non alloy or alloy, reliance has to be placed on the MTC issued by the shipper, which in the case of the appellant and confirms that the goods in question contain 0.0008 % boron and this answer to the Chapter Note. The said definition is adhered around the world as evident from the copies of the Chinese procurement literature and European Standard of classification of grade of steel. Further still validated from the test report of Peoples Steel Mills Ltd annexed at "L", leaving no ambiguity in regards to quality of the appellant goods as alloy and he is entitled for the benefit of FTA under Serial No. 3147 of Notification No.659(I)/2007 dated 30.06.2007. As per which the duty payable by him is 0%.
(vi) That lastly, it is beneficial for the appellant to state that the whole controversy has been created by the respondent by interpreting the Chapter Note in accordance to their own whims and wishes i.e. terming the appellant goods as non alloy despite availability of Boron to the extent of 0.0008%, which according to them least render the goods as alloy instead non alloy. It is settled proposition of law that nothing can be added or subtracted to suits ones opinion as that amounts to redundancy, which has to be avoided. Even otherwise it is settled rule of interpretation that "in interpreting the taxing statute the customs must look to the words of the statute and interpret in the light of what is clearly expressed. It cannot imply anything which is not expressed, it cannot import provision in the statute so as to support assumed deficiency. There is no room for intendment. there is no equity about a tax. There is no presumption as to tax nothing is to be read in, nothing is to be implied. One only look fairly at the language used nothing else to be done" as held by High Court and Supreme Court of Pakistan in their reported judgment starting from Abbassi Steel Industries Ltd v. Collector of Customs 1989 CLC 1463 to Messrs Fazal Ellahi v. Additional Collector of Customs, 2011 PTD (Trib.) 79. Even otherwise "if there are two or more interpretation of our provision pertaining to levy of tax on account of anomaly/ambiguity the one favourable to tax payer has to be adopted by the court" as per judgment reported as 1993 SCMR 274, 2005 SCMR 728, 2007 PTD 1656 and 2008 PTD 1227. It is considered opinion of the Superior Judicial For a in a number of judgments "that tax payer should not be made to suffer on account of bad drafting of the statute". Reliance is placed on the judgment of High Court of Sindh reported as 2004 PTD 901, wherein the Hon'ble judges of the Bench held that
"While interpreting the taxing statute the Court must look to the word of statute and interpret it in the light of what is clearly expressed. It cannot imply anything which is not expressed. It cannot import provision in the statute as to support assumed deficiency."
"While finding out intention of the legislature language of the law is not be seen and if the intention is cleared from the language used nothing else is to be done."
"if the legislature has not sufficiently expressed itself Court has no duty to act for it, for court is concerned with what it lays down and not…
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